Public Private Partnerships…What are They Good For?

By Duke Dennis Over its 25-year operating history, Metropolitan Capital Advisors (MCA) has worked on numerous Public Private Partnership (PPP) transaction financings. PPPs have increasingly Read more

The Power of RECA (Real Estate Capital Alliance)

By: Scott Lynn and Andrew Hanzl Metropolitan Capital Advisors (“MCA”) is a member of the Real Estate Capital Alliance ("RECA"), a professional association of 18 Read more

Getting Creative: HUD 221 (D) (4)

By: Andrew Hanzl Take notice! The landscape is shifting: In anticipation of a market slow-down, commercial real estate lenders are dialing back their leverage and Read more

Private Lenders: Filling the Void

by Roger Wyche There will be approximately $96 billion of CMBS loan expirations during 2017. CMBS lenders, therefore, have been counting on refinancing  Borrowers to Read more

A Bridge (Loan) to Everywhere

By Charley Babb Do you remember John McCain’s famous “Bridge to Nowhere” speech from 2005? As the Arizona Senator, and then later as the Republican Read more

Limited Service Hotels are, well…limited!

By Todd McNeill In recent times, the Limited Service Hotel sector’s reputation has steadily declined in the eyes of the finance industry. Once the darling Read more

TrumpCare and the Effect on Healthcare Commercial Real Estate Market

By Kevan McCormack Since Donald Trump has taken office as President of the United States, he has been very busy “making good” on his campaign Read more

What is the TRUMP Effect on Commercial Real Estate? 4 Key Points

— By Sunny Sajnani There is no doubt that Donald J. Trump in the White House is a game changer for the real estate industry. Read more

Whither CRE Construction Lending?

By: Justin Laub The mantra of commercial real estate developers around the country when speaking of the state of construction lending these days might be: Read more

The Good, the Bad, the Texas High-Speed Rail Line

By Duke Dennis Brady Redwine of Texas Central Partners (TCP) recently addressed a group of Texas A&M real estate professionals about the high-speed rail line Read more

UT Ranked #1 in Commercial Real Estate Yardage

-By Scott Lynn Every fall season, the University of Texas at Austin McCombs Real Estate Finance & Investment Center (REFIC) sponsors the National Real Estate Read more

2017: Not a Forecast (Just Some Thoughts to Ponder) for the CRE Market

By Brandon Wilhite Accurately forecasting the commercial real estate market’s performance is a nearly impossible task. There are far too many variables to assess and Read more

What is PACE Financing?

By Andrew Hanzl Global warming is now a widely accepted concern. As real estate professionals, what role can we play to ensure environmental sustainability? One Read more

Banks Reign in Leverage in Effort to Curb Apartment Construction

By Charley Babb My real estate career spans over three decades. Yet for the very first time, I have witnessed lenders exercise prudence and consequently Read more

Risk Retention in CMBS Starting to “Sink” in

By Todd McNeill The early signals of Risk Retention are reverberating through the commercial real estate capital markets.  Several conduit shops, including MC Five Mile Read more

Risk Retention, Risky Business?

By Scott Lynn Basel III, HVCRE…all these new lending regulations that mean lenders are loaning me less and charging me more. Good grief!!! And now, Read more

It’s Senior Living Not Senior Dying

By Kevan McCormack Everything in life and real estate evolves.  Static retail shopping centers evolved into vibrant entertainment venues where a family could spend an Read more

Metropolitan Capital Advisors Arranges $5,512,000 Acquisition Loan For A 9.77- Acre Lot In Frisco

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a land acquisition loan for a 9.77-acre tract located in Frisco, Texas at the northeast corner of Read more

Metropolitan Capital Advisors Arranges A $4,700,000 Construction Loan For UC Health Emergency Room (Arvada)

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a $4,700,000 construction loan for UC Health Emergency Room, located in Arvada, Colorado. The 0.69-acre site is Read more

Ground Leases-Friend or Foe?

On the surface, a ground lease seems like a simple concept: a landowner grants permission for a tenant to use their land in exchange Read more

What Do Baby Boomers and Millennials Have In Common & Why It's Important in Commercial Real Estate

By Charley Babb What do Baby Boomers and Millennials have in common? They both like to spend money. While they may spend their money on Read more

The Economic Benefits of Walkability

By: Brandon Wilhite Starting with the Federal-Aid Highway Act of 1956, the way cities were developed in the United States began changing. Although it was Read more

Brexit – Immediate Effect on Commercial Real Estate?

— By Sunny Sajnani In late June 2016, a historic referendum was voted on approving the British withdrawal from the European Union (EU).  The immediate Read more

Hotels: What Inning Are We In?

By: Justin Laub I recently returned from the Urban Land Institute’s national conference on hotels and resorts. The last time ULI held this event was Read more

Choppy CMBS Market Hoping For Resurgence

By Charley Babb CMBS issuance for the first quarter of 2016 was roughly half of the production for the same period in 2015. This has Read more

public private partnerships

Public Private Partnerships…What are They Good For?

By Duke Dennis

Over its 25-year operating history, Metropolitan Capital Advisors (MCA) has worked on numerous Public Private Partnership (PPP) transaction financings. PPPs have increasingly become particularly significant in commercial real estate. This post is an explanation of what PPP’s are, reasons to use a PPP, and finally, some local examples of PPP projects.

For starters, you might wonder what a PPP is exactly. According to the National Council for Public‐Private Partnerships (NCPPP), a PPP is: “[a] contractual agreement between a public agency (federal, state, or local) and a private sector entity.   Through this agreement, the skills and assets of each sector (public and private) are shared [to deliver] a service or facility [to] the public.  In addition to sharing resources, each party also shares the risk and reward potential of the delivery…”

PPP’s are often used as a tool to allow developments that would otherwise not financially be feasible.  From a local municipality’s perspective, engaging in a PPP falls within the category of social good.  For example, a city, Dallas would entertain a PPP to induce private investment, job creation and/or redevelopment of targeted areas that are often in need of revitalization. According to the office of Dallas Economic Development, “[i]t is… to provide assistance only [to] projects where such assistance is necessary to stimulate private investment and job creation. [Additionally]. [p]rojects occurring in Target Areas are provided special consideration.”

public private partnerships

The Omni Dallas Hotel was developed through a public-private partnership.

So, why would a project need the municipality’s involvement?

The question of a project’s viability usually boils down to one of two issues: either the costs are too high or the income is too low, thus making the project not worth investment.  This frequently occurs in low-income areas (i.e. typically targeted areas) or alternately, when construction costs are running rampant.  To qualify, “[p]rojects seeking economic incentives (via a PPP) must provide written assurance that ‘but for’ the incentives sought, the proposed project will not occur, or would otherwise be substantially altered so that the economic returns or other associated public purpose secured by the city’s incentives would be reduced.” If the project meets one of the three stated criteria, one way to overcome financial/economic hurdles is to enter a PPP.  If your project does meet one or more of the criteria above it could qualify for a PPP and receive one of the following real estate incentives:

  • Tax Abatements
  • Tax Increment Financing
  • New Markets Tax Credits
  • Historic Tax Incentives
  • Chapter 380 Grant Program
  • Freeport Tax Exemptions
  • Municipal Management Districts

These incentives can help a project achieve either lower overall costs or higher net income towards the bottom line –  both of which would result in greater returns to investors. This in turn would then be able to entice private capital to invest in and undertake the project.

PPPs are typically for public use. They include: infrastructure (roads or public transportation), schools, libraries, public meeting spaces (convention centers), support facilities, water facilities, hotels and urban redevelopment.  Local (North-Texas area) real examples are:

  • Texas Live!: A $1.25 billion stadium & mixed-use district featuring dining, entertainment, hotel and a convention facility adjacent to the new Texas Rangers Ballpark.
  • AllianceTexas Development: AllianceTexas is an 18,000 acre mixed-use development in North Fort Worth that includes the world’s first industrial airport and the nation’s largest inland port.
  • Irving Westin Convention Center Hotel: a $100+MM, 350-key high-end hotel that will support the Irving Convention Center.
  • The Star in Frisco: A $1.5 billion mixed-use development featuring the Dallas Cowboys’ practice facility, a planned Omni Hotel, sports medicine center, and more than 200,000 square feet of restaurants and retail stores.

When considering a new project, you should identify whether it meets adequate criteria to be considered for a PPP.  If it does, you could qualify for one or multiple incentives to turn your project from an average investment into a home-run of a deal!

The author, Duke Dennis, is a Senior Analyst in the Dallas office of Metropolitan Capital Advisors.  To learn more about PPP’s and how they can be financed Duke can be reached at (972) 267-0600.

Posted on by admin in Commercial Real Estate Finance, CREF 1 Comment